Japanese Fight Back As U.S. Companies Press Patent Claims

By ANDREW POLLACK,

Published: September 5, 1992

TOKYO, Sept. 4—
When the Nikon Corporation, the Japanese camera maker, agreed two weeks ago to pay Honeywell a reported $45 million to settle patent-infringement charges, it became one of the latest casualties in what some people here are calling the "patent wars." With increasing regularity, American companies are demanding, and winning, large royalty payments from Japanese companies for the use of patented technology.

But angry Japanese companies are preparing to fight back at what they view as excessive American demands.

They are beefing up their long-neglected patent departments, actively looking for cases of infringement and boning up on the American jury system, which they see as both inscrutable and biased against them.

In July, the Sanyo Electric Company sued Texas Instruments in Federal court in San Francisco rather than agree to pay what it called unreasonable royalties. Fujitsu is also challenging Texas Instruments' patent claims. The Mitsubishi Electric Corporation is challenging Wang Laboratories' patent demands in court.

And even as they complain loudly about American demands for royalties, the Japanese companies are beginning to make the same kinds of demands themselves, using their growing portfolio of patents.

"They are learning from the U.S. way of doing business," said Hiroyuki Kamano, a lawyer here. "Japanese companies are becoming more aggressive about making money through royalties."

New aggressiveness by the Japanese may have ominous implications for American companies, some experts say. Until now, Japanese manufacturers have relied on foreign technology. In 1991, Japan paid $3.2 billion more in fees for patents than it received from other nations for its patents, according to the Bank of Japan.

But there are signs that the balance is shifting. In recent years the companies receiving the most patents in the United States have been Japanese. In the future, Japanese companies may be in a position to collect large payments from American companies.

"Their patent power is superior to us still," said Tadayoshi Homma, general manager of the intellectual property licensing department of Mitsubishi Electric. "In the next century, things may be different." Signs of Change

Some signs of that are now emerging. Honeywell's settlement with Nikon was part of a broader settlement that calls for the Minneapolis company to receive $124.1 million from seven companies, five of them Japanese, for the use of its auto-focus technology. But one of those agreements, with Canon Inc. of Japan, requires Honeywell to review Canon's technology with a view toward paying royalties to Canon in the future.

Another harbinger of the future may be seen in Hitachi Ltd., which was rudely reminded of the importance of intellectual property in 1982, when it was caught in a Federal Bureau of Investigation "sting" operation and accused of trying to steal secrets from the International Business Machines Corporation.

Hitachi, which until 1984 paid out more in royalties than it took in, last year recorded a net profit of $110 million from royalties, helped by a special sales force that sells licenses for its technology.

The Japanese response has been prompted by a change in the way American companies view patents.

Patents were once used to prevent obvious copies of the products from which companies expected to earn profits. Now, the patents themselves are being viewed as a source of profits. American companies are asking for higher royalties than in the past, and they are increasingly taking their claims to court.

Texas Instruments Inc., armed with some basic patents on semiconductors, received royalties of $256 million last year, largely from Japanese companies. Early this year, Honeywell won a settlement of $127.5 million from the Minolta Camera Company after a jury ruled that Minolta had infringed Honeywell's auto-focus patents.

Wang Laboratories, which recently filed for bankruptcy protection, has been winning royalties for technology it developed to add memory to personal computers. The Loral Corporation, a military contractor, is seeking more than $1 billion from more than about 30 companies, most of them Japanese, for use of its patents for a charge-coupled device, a chip used to capture images in video cameras.

In April, a jury in Los Angeles ordered Sega Enterprises Ltd. to pay an American inventor, Jan R. Coyle, $33 million for infringing a patent for an electronic circuit technique. And just last week, a hearing officer appointed by the United States District Court in Newark recommended that the Matsushita Electric Industrial Company be ordered to pay $21 million for infringing patents held by Comair Rotron, a San Ysidro, Calif., company that makes fans used in personal computers. Seen as Japan-Bashing

Judging from newspaper articles and television reports here, some Japanese view the suits as a new type of American industrial policy and a form of Japan-bashing.